'Twin Towers' demolition highlights rot in Indian real estate sector

Breaches of zoning laws, building codes and commitments to buyers are rife amid booming demand for homes and offices

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The demolition of the “Twin Towers” near India's capital New Delhi has once again highlighted the rot in the country’s real estate sector, which suffers from rampant corruption, lawbreaking and duping of homebuyers.

The incomplete 100-metre-high towers, Apex and Ceyanne — popularly known as the Twin Towers — were constructed more than a decade ago in Noida, a satellite city of New Delhi on land earmarked for a garden for an existing housing complex.

Construction was halted after nearby residents brought a lawsuit that claimed the towers violated the site plan and blocked air and sunlight to hundreds of dwellings in the complex.

Court documents show that the developer, Supertech, which also built the existing residential complex, had colluded with authorities to construct the Twin Towers.

The order for their demolition marks a rare crackdown on illegal construction and puts a spotlight on a booming real estate sector rife with fraud and corrupt practices.

Experts say it sends a stern message to the real estate sector to follow the law but expressed doubts about whether it will bring a permanent change.

“The demolition is a huge and much needed shake-up for the real estate sector and is a huge, inspiring story for people who are fighting against such builders for years,” said Abhay Upadhyay, president of the Forum for Peoples Collective Efforts, a homebuyers’ organisation.

“But the Supreme Court has not passed an order to clean the entire system. There is no mechanism to ensure illegal construction is detected and stopped early … there is no way a homebuyer can differentiate between legal and illegal constructions,” he told The National.

Widespread breaches

With a population of 1.3 billion and one of the world's fastest growing economies, India is witnessing a rising demand for houses and commercial properties.

The real estate sector is booming and is now the country's second highest employment generator after the agricultural sector. It is expected to reach $1 trillion in market size by 2030.

While most Indian cities, including Delhi, have developed in a haphazard and unplanned manner over decades, leaving them with little space to expand, new townships and cities such as Noida have grown in a planned manner to attract a growing middle class aiming for world-class living.

Real estate developers have often tapped into this aspirant class with amenities such as swimming pools, play areas, clubs and parking spaces — a stark contrast to overcrowded housing colonies nearby that are plagued by water, electricity and parking issues.

But corruption and greed in the sector have left tens of thousands of homebuyers in jeopardy.

Breaches of municipal laws are common, with developers often flouting site plans and encroaching upon open spaces to build additional housing and commercial units.

Hapless homebuyers often end up owning properties that do not match the descriptions given by real estate developers, who hold great sway over local authorities and in some cases over law enforcement.

Flouting environmental laws by building in areas near the sea and rivers has become common, as well as breaches of safety measures against fires and earthquakes.

Four luxury high-rise apartments containing 343 flats were razed by authorities in southern Kerala state in 2020 after they were found to be built in critically vulnerable areas and violated coastal protection rules.

Authorities in Noida have demolished dozens of residential apartment complexes over the years, including one in May this year.

Homeless homebuyers

But the most critical issue remains the non-completion of housing projects that has left tens of thousands of homebuyers in the lurch for years, often burdened with bank loan and rent payments.

Over the course of a decade, Amrapali, one of the largest real estate developers in Noida, defaulted on delivering about 40,000 homes before the Supreme Court in 2019 ordered a public enterprise to complete the projects.

Indian courts have pronounced several similar judgments in favour of the hapless buyers.

The government in 2016 enacted a Real Estate Regulation and Development Act, more commonly called Rera, to protect the interests of homebuyers.

It was meant to tighten regulations around the real estate sector, prevent buyers from falling victim to unscrupulous developers and to end corruption.

But breaches continue, with builders and authorities often colluding to tweak laws in favour of developers.

“There is a huge nexus of influential people which leads to such a violation of rules and regulations because a builder knows if there is a problem, those parts of the nexus will protect him,” Mr Upadhyay said.

Updated: September 05, 2022, 12:36 PM